Rebooted Sterling eyes potential for reshoring

After a three-year retirement, Gravelle, 65, purchased Sterling Manufacturing Co. in South Lancaster, MA with Bowker, his long-time colleague at Mar-Lee in 2011. Mar-Lee, a custom molder, was sold by Gravelle in 2008 to a French plastics manufacturer. Gravelle's son Michael, who is experienced in the injection molding business, also came in as a partner.

John Gravelle shows molded implants.

"My plan was to be retired," says Gravelle. "But I went 100 mph for 40 years, I really missed the action."

At about that time, the owners of Sterling were quietly looking for a buyer. The company was founded in 1968 by Ted Underwood, who built up a steady, solid business with a reputation for excellent customer service. He sold Sterling and the business became available for sale again in 2011.

The Gravelles and Bowker found a company with a loyal, if somewhat small, customer base; a group, of loyal, experienced employees; and a 35,000 s.f. physical plant designed for optimal molding efficiency.

"The heat generated by the molding process is used to heat the offices," says Bowker, who also notes that one side of the building is partially underground, further cutting energy costs.

"This company was a real gem in the rough," John Gravelle says. One asset that he particularly appreciated was the presence of a well-integrated IQMS MRP system.

At the time of the purchase, the plant had 45 employees and 24 injection molding machines. The new owners reconfigured and reorganized the workforce and molding operations to expand capabilities. Older machines are being retired and replaced with new Engels.

During a visit by Plastics Today the week before Christmas, two brand new Engel machines were being installed. They're 130-ton hybrids with different barrel sizes. Gravelle and Bowker bought hybrids instead of all electrics because hydraulics are often required on the back end of the machine to operate unscrewing molds. They like the tiebarless aspect of Engels so they can run molds that usually require much-larger presses.

The total press count at Sterling is now 23, but productivity is dramatically higher because of automation in the new machines and improved utilization of the remaining machines.

That's important because business is also up.

"Our revenues were up over 33% in our first full-year of operations," says Gravelle. Profitability is also higher. Sterling does not disclose sales data, but 2013 is looking good for double digit growth as well.

"We hit the ground running shoring up existing customers and looking for new business," says Michael Gravelle, who is in charge of business development.

Some of the growth is fueled by business that came back to the United States from China.

One example is a pad printed medical diagnostic device. "Medical diagnostics are exactly the kind of business where we can be competitive, using our automation and tooling capabilities," says CEO Gravelle. "It's the high-volume, commodity-type product that had gone to China, but now we want to bring that back as well."

Medical has risen from 33% to 40% of Sterling's business and is likely to grow further as the company fills out its clean room. Plans are already drawn up for a clean room expansion. Gravelle plans to buy several more new injection molding machines in the next 18 months.

"It's not just product and mold design, but all aspects of project engineering," says Michael Gravelle. Bob Clinton, who had worked with the Gravelles and Bowker at Mar-Lee, is the vice president of engineering at Sterling Manufacturing. Recent technical assistance from Clinton, for example, helped boost business with a defense contractor that makes aviation headsets and aerospace products.

"I never would have bought Sterling if these guys had not wanted to come in," says John Gravelle.

One interesting piece of the company's strategy to reshore manufacturing projects is to offer customers the option of having tooling made in China. "We don't start by recommending Chinese tooling, but we offer it as an option where it might be necessary to win the business," says Gravelle. "We explain all of the pros and cons, and then they can make the decision. Believe me, as an old tool guy, this was tough to do, but we have made connections with mold-makers in China who do extremely high quality work. I was surprised at how good they have become."

More than half of the company's molds, however, are still made by U.S. mold-makers, most of them within a short drive of the company's location in central Massachusetts.

What the new owners of Sterling are doing is a good case study of how a small, older U.S. manufacturer can be rebooted-pretty quickly-to become competitive in the global marketplace.

"I fully expect that this company will be three to four times bigger than it is now within five years," says CEO Gravelle.